Goldman’s big bonus payouts weigh on quarterly profit

Goldman’s big bonus payouts weigh on quarterly profit

Goldman Sachs’s net profit fell 13 per cent year-on-year in the last three months of 2021, as the Wall Street bank paid out bigger bonuses than analysts had forecast.

In fourth-quarter earnings on Tuesday, Goldman reported net income of $3.8bn, or $10.81 per share, compared with $4.36bn, or $12.08 per share, in the same period last year.

This was a bigger drop than analysts had predicted, with the average forecast for net income of around $4.1bn, according to consensus data compiled by Bloomberg.

Concerns around operating costs following JPMorgan’s earnings on Friday had weighed on bank stocks.

Goldman reported operating expenses of $7.3bn for the fourth quarter, up 23 per cent from a year earlier and more than the $6.4bn analysts had expected.

Pay costs including bonuses were up 31 per cent year on year in the fourth quarter at $3.2bn, more than the $2.9bn analysts had forecast. Overall, salary expenses were up 33 per cent at $17.7bn in 2021, mirroring the bank’s revenue growth for the year.

Full-year net profit for 2021 came in at $21.2bn, more than double what it was in 2020 and easily the bank’s biggest year.

Goldman shares were down more than 4 per cent in pre-market trading in New York.

The results